TMI Blog2013 (10) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... t:- Assessee in the present case is admittedly a Non Resident in India and its entire income is liable for deduction of Tax at source. As held by the Hon'ble Bombay High Court in the case of DIT (International Taxation) v. NGC Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT], when a duty is cast upon payer to pay tax at source, on its failure to do so, no interest can be imposed upon payee Assessee under section 234B - Following the decision of Hon'ble Jurisdictional High Court, in the present case, interest under section 234B cannot be imposed on the Assessee on failure of payer to deduct tax at source from the payments made to the Assessee – Decided in favor of Assessee. - IT Appeal Nos. 7809 (Mum.) of 2010 and 7365 (Mum.) of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges such as terminal handling charges, inland haulage charges, demurrage and detention charges etc. In the absence of Double Taxation Avoidance Agreement between India and Hong Kong, the Assessee offered to tax its entire income in India in accordance with the provisions of section 44B on presumptive basis at the rate of 7.5% on freight and ancillary income. During the course of assessment proceedings, it was noticed by the AO that the Assessee has collected service tax also from the customers on freight income and ancillary charges, but the amount of service tax so collected was not included by the assessee in the gross receipts while computing its total income taxable in India by adopting the net profit at the rate of 7.5%. According to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he held that the amount of service tax was required to be considered while computing the income of the Assessee at the rate of 7.5% of the gross receipts. As regards the decision of Hon'ble Uttaranchal High Court in the case of Schlumberger Asia Services Ltd. (supra) relied upon by the assessee, the AO held that the issue involved therein was different inasmuch as the same was in the context of reimbursement of the Custom Duty which was the liability of the importer and since the Assessee was never liable to pay the custom duty and the payment of custom duty made by the Assessee was also not in connection with providing services under the contract, the reimbursement of custom duty was directed to be excluded by the Hon'ble High Court from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of deemed profit under section 44BB unlike the other amounts received towards reimbursement. He also relied on the following decision of the Tribunal in support of the Assessee's case on the issue and submitted that a similar issue has been decided by the Tribunal in all these cases in favaour of the Assessee. Sr.No. Judicial Precedent Citation 1. Dy. DIT v. Hanjin Shipping Company Ltd. (AY 2008-09) ITA No. 7010/Mum/2011 2. Hanjin Shipping Company Ltd. v. Addl. DIT (IT) (AY 2007-08) ITA No.8672/Mum/2010, dated 30-10-2012 3. Islamic Republic of Iran Shipping Lines v. Dy. CIT (International Taxation) [2011] 11 taxmann.com 349 (Mum.ITAT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee should be included in the gross receipts for the purpose of computing the total income as per the provisions of section 44B. It is observed that reliance on the said decisions was placed by the Revenue in the case of Schlumberger Asia Service Ltd. (supra) where the issue involved was whether the reimbursement of custom duty paid by the Assessee could form part of the gross receipts for the purpose of determining the deemed profit of the Assessee under section 44BB and the Hon'ble Uttarakhand High Court found the said cases to be distinguishable on facts observing that in none of these cases the issue of reimbursement of the custom duty was involved, the nature of which was statutory payment. Their Lordship held that reimbursement towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bai bench in the case of Islamic Republic of Iran Shipping Lines (supra) has been subsequently followed by the Tribunal at least in three cases cited by the Ld. Counsel for the Assessee including the case of Sidco Forex International Drilling Inc. (supra) wherein Delhi bench of the ITAT has decided a similar issue in favour of the assessee holding that reimbursement of service tax, being a statutory liability, would not involve any element of profit and the same therefore could not be included in total receipts for determining presumptive income under section 44BB. 8. Keeping in view all the judicial pronouncement discussed above, we are of the view that the preponderance of judicial opinion is in favour of the Assessee on the issue and k ..... X X X X Extracts X X X X X X X X Extracts X X X X
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